Zomato: the old dog in food space learned a new trick

#PersonalNoteDraft: For me the surprise was not the growing number of orders they are handling per day. It was fascinating to me to learn how Zomato attempted to rewire their DNA from that of a media-content business to that of a transactions business.

Last year Zomato entered new category, going beyond just listing, but also letting users order from restaurants. And on recent blog post, Zomato’s CEO had put a footnote saying “we’re processing ~28,000 orders a day across India and UAE – our two primary focus markets for online ordering. And while our advertising business still accounts for the lion’s share of our revenue, our online ordering business is rapidly gaining significant share.”

For me the surprise was not the growing number of orders they are handling per day. It was fascinating to me to learn how Zomato attempted to rewire their DNA from that of a media-content business to that of a transactions business.

Co-founder and CEO of Zomato penned a post about their experience “We’ve been in the content business for what feels like aeons now. And while it comes with its own unique challenges, the content business is quite different from the transactions business. The content business comes with small allowances for errors. You get more chances to experiment and make mistakes, and you can afford to take a two-day break to focus on something else if you need to, without things falling apart. The transactions business, however, is a completely different animal. If you take your eye off it for a minute, things can get out of hand very quickly.”

Zomato had to build their transaction vertical called Zomato Order from scratch, and it required 180 degree of paradigm shift in a way they think about their approaches. From a mindset of a predominantly content-first/media-first DNA to building a silo team whose mere ambition and goal is cracking the transactions-first business. These things aren’t quite easy, I can attest to that with my own experience of building data-first product in a content-first company, 99.9% of time everyone tries to measure everything with what they already know to be true, which is with what has worked in content-first world. This causes a lot of unnecessary kerfuffle among teams.

Zomato managed to put together a dedicated team to march in the direction of the new vision, to the horizon of transaction platform. Though the Content and Transaction businesses exist to serve the same target group, but the job that users hire the content and transaction platform for is very specific and distinct.

This is a smart move. To ensure the still-growing Transactions team wasn’t distracted by any of the Content business’ priorities, they separated the two teams and moved them to independent floors. Deepender puts it “It’s no secret – finding the right people is half the battle won. Given the razor-sharp focus and intense effort the online ordering business needs, we assembled an independent team dedicated to kickstarting and growing it. We put together a crack team of engineers, product managers, and designers to give the product shape, and used that as a foundation to build on top of.

A few months down the line, we had Pankaj, our co-founder take over the business to drive things even faster. With his deep understanding of Zomato as a product, and a data-driven approach to business, we have been able to significantly grow order volumes, improve our retention cohorts, customer support and satisfaction, as well as market the order business in a cost-effective way.”

Side note: While discussing this with my colleague, he is not impressed with the number 20,000 orders a day. He believes if a new startups that is starting six month ago (when Zomato Orders was started), it could have been impressive. But with Zomato’s platform power, he thinks they have unfair advantage and the current scale of Zomato Orders isn’t upto the mark for him.

The fact is when you are a established business and add a vertical, mere a platform power doesn’t make you invincible. Though Google had the ultra-unfair-advantage and platform power to push Google Plus down our throat, we all know how that eventually ended. For products to succeed on their own merits, it needs to solve user’s problem without losing money while doing it at a scale. We will revisit their journey in a year or two, how the transaction business shapes up… but by the looks of it, the company seem to be in the right track to crack the space.

Personal Notes Draft: These personal notes series is not to be taken too seriously. It is just a personal note, but the only new thing here is the draft is public. The draft may or may not change from time to time. Sometimes its complete, sometime it isn't. At times the draft remains a draft forever with no +ion and -tion.

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